JSW Steel (JSWSTEEL) Q4 09/10 earnings summary

Executive summary

• FY2009-10 standalone performance rebounded strongly: net turnover rose 30% YoY to ₹18,202.48 crore and PAT increased 341% to ₹2,022.74 crore.

• Crude steel output grew 61% to 5.987 Mt and saleable steel rose 67% to 5.72 Mt, despite October-November flood disruptions at Vijayanagar.

• Growth reflected new capacity, higher domestic sales, improved product mix and cost initiatives; standalone EBITDA included ₹412.95 crore of forex gains.

Financial highlights

• Standalone gross turnover increased 28% to ₹19,456.64 crore; net turnover rose 30% to ₹18,202.48 crore despite blended sales realizations declining 21%.

• Standalone EBITDA rose 55% to ₹4,805.74 crore; EBITDA margin was 26.2% versus 21.8% in FY2008-09.

• Standalone PBT was ₹2,819.65 crore versus ₹677.63 crore; PAT reached ₹2,022.74 crore versus ₹458.50 crore.

• Consolidated net turnover was ₹18,957.17 crore, EBITDA ₹4,606.67 crore and PAT ₹1,597.55 crore; overseas weakness reduced consolidated profit versus standalone.

• Domestic turnover increased 54% to ₹16,460.61 crore, while export turnover declined 34% to ₹2,935.82 crore.

Outlook and guidance

• FY2010-11 business plan targets production of 7.0 Mt and sales of 6.75 Mt, growth of 17% and 18%, respectively, over FY2009-10.

• The 3.2 MTPA Vijayanagar expansion was targeted for completion by March 2011, taking steel capacity to 10 MTPA at the site.

• FY2010-11 plans included commissioning a 4.2 MTPA pellet plant and progressing beneficiation, Salem blooming mill and downstream cost-saving projects.

• US operations were expected to improve in FY2010-11 through higher utilization and realizations; Q4 FY2009-10 generated positive EBITDA of US$2.08 million.

• Higher input costs were expected to be offset by improved realizations, cost savings and a richer product mix, though raw-material pricing beyond Q1 remained uncertain.